Okay, well, great. Well, thank you everyone for attending our Autumn Equinox Fall Webinar. My name is Chris Sakai. I'll be the host today. You'll be hearing a lot from me. I'm the Director of Research at Singular Research. And first off, we have L.B. Foster. So please, go ahead, guys.
Thanks, Chris. Hello, everybody, it's John Kasel, and joining me today is Bill Thalman. We're gonna be walking you through the story of L.B. Foster Company on the September 11th of 2024 . Next. So I'm John Kasel, I'm President and CEO of the company. I've been—this is my 22nd year with the company. So we'll share a little bit more about myself, and Bill will get to that later in the remarks. Next. So the company, as I mentioned, has been around for quite a while. I was here for 22 years of the first 122 years of the company. We're headquartered in Pittsburgh, Pennsylvania.
We're listed on Nasdaq FSTR, and you can see the sales that we've generated here on a trailing 12 months, 2023 at $544 million. We talk about, we design, manufacture, distribute, and provide field services. We do this in industrial markets of transportation. In transportation, specifically, some rail, and freight, and passenger, also the industrial market, utilities. We service the water, sewage, and gas markets, and then we provide building materials and supplies to industrial market, using concrete as well as steel pipe. We operate the company in two business segments, rail technologies and services, you see on the left-hand side of the chart here, as well as infrastructure solutions.
60% of the rail represents the largest segment we have, and the segment that goes all the way back to starting the company back in 122 years ago. One thing that we really are strong on is our sales. 90% of the sales are regional here in North America. We do have some other entities where it makes sense to be in those markets, but we are primarily focusing on what we can do in the greater infrastructure here in North America. Next. As you will hear from many companies, you know, everybody talks about a strategic transformation. Well, I will tell you, we're on our way. We rolled it out in 2021. We're gonna walk you through the steps that we made.
We're very excited where we're at, and we think we align into this Infrastructure Super Cycle very, very well. We also think it's a good time to invest in the company. Valuations are very attractive for the type of business we do. More importantly, I think the type of business that we are becoming, not just today, but in the future. And cash. The company's had a strong tradition of generating cash, and that's really a focus of Bill and I, and the management team, is to continue to generate cash. Then we're expecting growth in the second half, looking at 29% growth on a year-over-year for H2 on our EBITDA, and additional cash of $25 billion-$30 billion.
So we are looking at a very strong H2 here, in line with what we're seeing in the markets. Next. So earlier I mentioned, you know, one of the things is transformation in play, and if you sit back and really look at the company, one thing you want to talk about or think about is why invest in L.B. Foster? Well, a good part of this transformation comes in these four buckets. The structural improvement of the company and the profitability, much of what we've done here with the portfolio moves is behind us now. So if you look back at the last couple of years, there's a little bit of noise in our numbers. You know, that's gonna get cleaned up here over the coming quarters as well as years.
Much of what we're doing today, we're very excited about because it's organic. We're not looking at going out and doing a big deal. We're maybe looking at one or two product line expansions through M&A, or a nice little bolt-on acquisition, but much of what we're doing is organic in nature. There are things in our wheelhouse, there are things that we're strong to do, and it doesn't take a lot of money, as you see in this disciplined capital allocation. In fact, only about 2.5% of our capital as a percentage of sales is related to capital to make these things happen.
And Bill will get into details about the favorable free cash flow and some of the macro or structural things that are gonna be changing this year related to our free cash flow position. Next. So a lot going on on this chart, but the big take, couple of big takeaways, we were added back to the Russell 2000 this year. So if you see the bottom right-hand corner, and we had a 4X improvement as far as volume and liquidity of our shares. So we're very happy to be back in that. We're seeing a lot more trades today. EBITDA, we talked about, is very attractive today. Free cash flow, second half year is very, very strong. Again, I'll let Bill talk about the free cash flows, 13.8%-18%. The stock is very attractive.
Next. So, just a quick look back, something that we do just to make sure that we're humble. We gotta figure, you know, we're stronger today because of some of the challenges that we just went through. We had a very difficult time between 2015 and 2020, as many companies do. But it's an era that we did survive, but it was at a time that we had some businesses that really weren't part of our portfolio, as far as our strategy. Our largest customer had a lawsuit, which is behind us now. We were out of the Russell 2000, which I mentioned we're back in today, and just a lot of headwinds. It was a perfect storm. So in 2021, it became clear the company needed to do something different.
I was chief operating officer at the time, and it was time to refresh the board of directors. Brought in Ray Betler. Ray was president and CEO of Wabtec, based here in Pittsburgh, Pennsylvania. You know, a guy that brought that put that business on the map over his ten years with that company. So we were very excited to have Ray, as well as we refreshed all but one of the board members. I was appointed to CEO in July of 2021 . We went back and said, "Well, okay, let's really focus who we are, what we do, and how we do things well. Get back to basics." We put together our strategy, we came together with a playbook, and we've been very busy over the last couple of years with our four acquisitions and five divestitures.
Right now, we feel these portfolio moves, as I mentioned, are behind us, and we're starting to see some traction in the marketplace. Next. We look at the company in really two buckets. This goes across the entire company. When I talked about rail and infrastructure as far as segments, that's how we report out, but how we run the company is on this page and the next page. We start with the return platforms you see here on the right. Rail Products is our longest product line, goes back to the start of the company. Something that we know we do very well. It's also something that some of the products got commoditized over the years, and so we've really been cleaning up that product line and product offerings that we had.
Our U.K. technology services is something we got into in 2010 with the acquisition of Portec. We've been expanding that, but also we've been kind of tapping the brakes and really understanding what's going on in the European markets, specifically in the U.K. That's a business we really like. There's great technology there, but it's sitting in our, what we call a returns platform. And steel products, this is where many of the divestitures have occurred over the last two and a half years. This is where we're playing in a larger space in energy. We feel very good with the businesses we have here today. So in these return platforms is where we're—these are solid businesses.
They're ones that Bill and I really can count on as far as delivering each and every year, and more importantly, they're driving the cash to fund what you see here on the left, which is our growth platforms. So the first two are the, in the rail space, Global Friction Management. This is, again, came with the Portec acquisition in 2010. This is where we're adding a lot of value to our customers on the rail side, both transit as well as freight, giving them better operating efficiency, better fuel efficiency, helping with safety, and also helping them with their life of their assets, specifically wheels and the rail itself. Total Track Monitoring is something we've been working with for a number of years, and now it's really taking off.
This is about really the safety related to passengers as they come across crossings, the relationship with the trains, as well as the trains themselves, and giving that early look or early reading, if you will, to the train operators, both freight and transit, to how they're performing, how the train is acting on the rail, and giving them the opportunity to do something before something bad happens, like we saw just 50 mi from Pittsburgh here in East Palestine. So it's an area that's... It's a really exciting area for us, and it's an area that we have a really large technical base, and been doing for quite a while.
The other part of our business that we're very, very excited, and we did a couple of years ago, did an acquisition with the VanHooseCo company, is the precast concrete products. Something that we have grown substantially. It's something that complements the rail side very, very well, and something that we feel that we continue to grow, work on organic programs. And it really gives us the opportunity to, as rail goes up and down a little bit with maybe seasonal cycles, precast will be there and be solid. So it really gives us a strong focus on our growth opportunities as you see in this particular platform. Next. So, here's where you see the returns and growth platforms. We talked about them, or I just talked about them.
Now, this is what they actually mean, and why our, our profitability is improving, significantly in the last couple of years. On the right-hand side is we're really focusing on what we do, what we do well. As far as the sales side, you can see on the return side, this is where we're cleaning up the portfolio, and the margins there are respectable with those types of businesses at 15%-25%. If you look across rail, UK, and steel products, they're all consistently delivering, those gross margins. So we've done a lot of work there, cleaning that stuff up. This isn't the future. This is where we're at today. On the left-hand side is, the Global Friction Management, what I said was very exciting. You can see the growth of 24.5% since 2021.
Same true with the Total Track Monitoring, 300% growth in the last couple of years of precast, some of that being organic, and some of that being, you know, organic with the acquisition of VanHooseCo, but 88% growth. Of course, everything we're looking at now is related to organic growth in this business. More importantly, this is where we're investing in money, and time, and energy, as well as people. This is where technology innovation resides, and you can see that reflective in our margins below, between 25% and 45%. So we feel very, very good. We have a strong base on the platform side and strong growth opportunities, not just on sales, but also on the respective margins. Next.
So here's something that, you know, we listened to a debate here in North America last night, and there's a lot of money out there. There's a lot of money to be spent, and there's a lot of projects. Here's $18 billion that falls in, you know, in the industrial markets that we serve, be it precast, be it rail. Very, very excited about the opportunities. The monies are out there, and we're seeing a lot of activity. We got a strong backlog finishing the year and heading into next year, so there's quite a bit of wind in our sails, and we're ready to deliver. Next. Here, I'll turn it over to Bill, and I'll come back with some closing remarks. Bill?
Thanks, John. Morning, everybody. Again, yeah, this is Bill Thalman. I'm the CFO of L.B. Foster. I joined the company in March of 2021, just as the company was kicking off the strategic reassessment that John had mentioned. And we've been very busy over the last three and a half years or so with a lot of portfolio work and cleaning up of the business, and we're pretty proud of what we achieved and excited about what we have in front of us, so happy to share our story here this morning. Next slide, Lisa, please. So this is a nice chart to lay out the moves that we've made over the last two and a half years or so.
With a focus on divesting portions of the business that were not part of the long-term strategy of the company any longer and focusing the investment in acquisitions that were aligned with our strategy, primarily driving investment in rail technologies as well as precast concrete. And as you can see, over that time horizon, the sales have grown just about 10% or so on a net basis overall because of the portfolio work. But you can really see the expansion in margins over 2022. We're up nearly three points overall in terms of margin improvement because of the work that we've done on the portfolio, as well as the legacy business getting very focused on profitability initiatives, pricing initiatives, mix improvement, cost controls, things of that nature.
So, a lot of work to improve the performance of the business, and you can see it in the bridge chart there on the slide. More to come on that in the future, and maybe we'll go to the next slide that shows a little more of a gradual move in terms of the transformation on profitability by quarter. Excuse me. Yeah, so you can see that it was a slow, slower growth on a net basis early on in 2022. But then it really began to accelerate with the acquisition of VanHooseCo that was completed in August of 2022, as well as the funding initiatives that John mentioned around infrastructure projects that provided a strong lift in revenue moving into 2024.
While that growth is nice to see, from a percentage point of view, looking at margins, the margins performance in terms of growth has been that much more remarkable in terms of the performance. We've seen a nice improvement, plateaued a little bit in most recent quarters, but we expect to be between 22% and 23% longer term. We expect the second half of 2024 to show improvements in terms of gross profit expansion, with a lot of the work that we've got coming in terms of growth and profitability within the business. So we'll talk a little bit about that in terms of the second half here in the next slide. Next, Lisa, please. Yeah, thanks.
So one of the things that we wanted to highlight with respect to 2024 is, you know, we really have a bit of a tale of two halves. We had a really strong start to the year in the first quarter, but things were a bit softer actually in the second quarter. The weather within the infrastructure business created a little bit of a headwind related to revenue and profitability generation in the second quarter on a year-over-year basis, and then also, our rail distribution business had a bit of a soft patch in their commercial market that adversely impacted profitability and sales on a year-over-year basis, so essentially, we were flat year- over- year. The organic growth was up about 5% in the first half of the year.
But the EBITDA, on the right-hand side, you can see, we were down about $1 million, about 7% on a year-over-year basis, and that was largely due to the rail distribution market being a bit softer, as well as some higher SG&A costs we incurred related to a restructuring that was announced in August. So but when you look at the guidance that we've put out here, and all the numbers on the slide are based on the midpoint of our guidance that we've issued for the balance of 2024, we're really expecting a strong acceleration in profitability in the second half of 2024. The sales will still be yet a bit tempered with the weakness in the rail distribution business that I mentioned before.
But when you look at the year-over-year improvement in profitability, it really accelerates because of the work that we've done, particularly in the precast business. The U.K. had a sort of challenging period in the second half last year. That situation is getting better, so we expect the business to be better in the second half this year in terms of overall profitability. And our rail technologies businesses, the Total Track Monitoring and Friction Management are doing very, very well. So, and we feel like the strategy is really coming through in the results, particularly related to the second half of 2024 .
And as John mentioned before, we expect year-over-year growth and profitability to be right around 29% in the second half of the year, and almost 12% for the full year. So still really great story in terms of improvement and expecting more, obviously, moving into 2025. Next slide. So John had mentioned that historically we've been very disciplined around leverage management and cash generation. The company's been known for a very long time to be very good at generating cash. It's a capital-light business model. Overall, we don't require significant CapEx in the business. And frankly, our CapEx spending levels at the moment are a little bit elevated at about 2.5% of sales because of some growth platforms we're investing in that'll drive nice returns moving into 2025.
But in the first half of the year, cash was a bit of a drain in the business, which is normal from a working capital investment point of view. You know, that working capital unwinds in the second half of the year, and when you look at the full year, while free cash flow is expected to be neutral, basically break even for the full year, we expect $25-$30 million worth of free cash flow to be generated in the second half of the year. And importantly, the Union Pacific obligation that we've had for the last several years, we've got $4 million left to pay on that in December, and then that obligation will be complete and fully funded.
So, we expect that's $8 million of free cash flow that will come to the business, going forward in 2025, on top of what we're already reporting as very strong numbers historically, which, as you can see, on average, it's about $22 million over the last two years, excluding the Union Pacific payment. And so, you know, with the fact that we don't have any NOL, or we don't have any significant tax burden because of our NOL position and the improving profitability profile of the business with low CapEx needs, we feel like it's a very, very strong free cash flow story to be taking a look at, with free cash flow yields at about 15%, targeted for 2025. 15%, against today's stock price.
So we feel like we're in a good position, and we've got a good message there with respect to free cash flow generation and the related valuation. Next slide, Lisa. Capital allocation, important topic for us to cover here with a very disciplined approach. We feel very good about our ability to maintain our leverage levels. We target two times. We're a little elevated right now at 2.7 . We'll see that decline through the balance of the year. You know, we again target 2x , you know, with a strong cash generation for the second half of the year, as well as the improving profitability outlook. We feel good about that target for the longer term and then here in the short term.
As I mentioned before, CapEx, this, at the moment, is elevated at 2.5% of sales, but we expect that number to return to kind of more historical levels, at about 1.5% of sales, in 2025. We do have a share repurchase program that we've been very active with. And, the board just recently removed some restrictions related to that program, which allows us to buy more stock if that's, an attractive, option for us. And as John mentioned before, we will look at smaller tuck-in acquisitions.
At the end of the day, it's important to highlight that we believe our portfolio, as it exists today, can achieve our aspirational goals that we have outlined for 2025, which John's gonna talk about here in his closing remarks, so with that, I'll turn it back over to John for his closing remarks, and we'll leave a couple of minutes for some questions at the end. John? John, you may be on mute. John?
Thanks, Bill. Sorry, I had a technical difficulty there. Before I turn it over to Chris, I wanna just hit what Bill was just talking about there, and that's where we're looking at with our aspirational goals, as well as remind you our key messages on why you should be investing in L.B. Foster. Next. So on the left-hand side, we hit these in the beginning of the pitch. You know, transformation's on its way. Each and every day, we're looking to continue to strengthen our position and really understand what's going on related to Infrastructure Super Cycle and how we can leverage this, not just in 2024, but for many years to come. Valuations as far as this company, our projections, where we're going, you know, it's a very attractive time. Company has been a long...
We've been here a long time, we're gonna be here for a long time to come, and it's something you can really count on for us to be able to, to deliver, value as well as EPS. Bill mentioned it earlier, it is about the two halves. It's a tale of two halves. Very strong second half, which we expect to continue into 2025, related EBITDA, and as well as cash flow between $25-$30 million, in line with the seasonal work that we're seeing. So if you look on the right-hand side, this is what Bill was talking about, the aspirational goals. This is something we put a marker out there back in 2021. And we're still talking about them today because we're lined up to make these happen. $580-$620 million revenue.
GP, we're not far away from that today. It... You know, we're talking about 22%-23%, and adjusted EBITDA, $48-$52 million. So, you know, at the time it was, you know, how are we gonna get there? We... But the reality is, we were focused, we had a playbook, and we've been after things, and now we're seeing the headwinds are diminishing and the tailwinds are coming in with a lot of bidding activity, a lot of work, and honestly, very good execution by our people in the company, both on the admin side as well as the people in the plants and yards. A very strong focus, real strong focus on driving profitability, not just today, as I said, but for years to come. So thank you. We'll close the pitch here.
Sorry about that technical difficulty, and turn it back to Chris. Thanks, Chris.
Okay, great. Thanks, John and Bill. If you do have a question, you could please ask it in the questions section of the GoToWebinar panel. I will start with some. We just have maybe time for one or two questions. It looks like, I mean, you are forecasting some gross profit expansion and gross margin expansion. What are some of the things that are gonna get you there?
It's really, thanks, Chris, for the question. It's on the left-hand side, where we looked at the growth platforms. The continued excitement we're having in what we're going on with TTM and friction management and our precast business. Those businesses are performing very well, and you can see their gross margin contribution there, significantly higher than we have on the return side. That's where we're doubling down, that's where organic opportunities are happening, and that's where we're really gonna have a strong second half of the year and continue into 2025.
So can you talk more about your restructuring program? Where are you in it? How much will it be reduced against SG&A, and when do you see it completing?
We did it... so here's the story. When we did all those, moves, we had quite a bit of stranded costs that were left in corporate over the last two and a half years. So we decided to keep the costs there to put our systems in place and get our people up to speed what we need to do to really run this business. So we did quite a work behind the scenes, implementing things like, Planful, SAP, Intelex, good systems to help us run the company. This year, we set off early in the year and we said, "Well, now that we're doing these things, how can we streamline the company?
How can we get better at what we do, and really take the focus from the back of the house, if you will, to the front of the house, with the customer-facing and our innovation technology?" So we made the move. The move has already been complete. It was about $4.5 million of savings. So, you know, something that nobody likes to do. It represented a significant part, 7% of our salary workforce, but something that we needed to do. And it's really about shoring up and creating that base that we're looking for the continued growth. So the heavy lifting and the work is behind us on that, on that program.
Okay, great. Well, thanks. Looks like we're just about with one minute to go. Do you have any final closing remarks?
Thanks for your time today and, you know, we're excited. You know, we really do think this is a great time to... You know, for years, people have been talking about, well, the price may be out of whack. Well, it's not today. I think where we're at, the valuation, what we're talking about, especially the second half of the year, I think it's a great time to invest in the company. And, we're gonna continue to drive, returns, for you and for us, for years to come. So thank you again for your time, and we'll turn it back to you, Chris.
Great. If you do want our most recent report on L.B. Foster, it's in the handout section. Thanks for that, thanks for the presentation.